MNI DATA: New Zealand Retail, Migration Dnside Risk to MonPol

By Sophia Rodrigues

     SYDNEY (MNI) - New Zealand retail sales posted a modest gain in the first

quarter, and net migration slowed, raising worries about the outlook for

household spending and thus posing a downside risk for the Reserve Bank of New

Zealand's monetary policy.

     Data published by Statistics New Zealand Monday showed retail sales rose by

a small 0.1% q/q in Q1, significantly falling short of MNI median forecast for a

1.0% growth, and marking the slowest pace of increase since a 0.1% fall in Q1 of

2015.

     In other data published Monday, net migration rose 4,930 in April, slowing

from a gain of 5,380 in March, and marking a growth below 5,000 for only the

second time in three years.

     In the May Monetary Policy Statement, the RBNZ said it expects household

consumption growth to decline further due to slowing in house price inflation

and population growth but said the risks to the forecast lie to the upside.

However, a bigger than expected fall in consumption could lead to a cut in the

official cash rate, the RBNZ said, while discussing the key risk scenarios.

     The Q1 data showed the sharp slowing in retail sales was mainly on account

of a 5.0% q/q fall in clothing, footwear and accessories, a slowing in

supermarket and grocery sales (+1.0% in Q1 vs +1.3% in Q4), a 0.6% fall in

hardware sales for two consecutive quarters, and a 1.9% fall in recreational

spending.

     Core retail sales rose 0.6% compared with a 1.8% rise in Q4. In value

terms, retail sales rose 0.2% q/q in Q1, after a 1.7% rise in Q4.

     The international travel and migration data showed a slowing in net

migration in the year to April to 67,000 compared with a gain of 71,900 a year

earlier.  The gain for the April 2018 year was made up of 130,500 migrant

arrivals and 63,400 migrant departures.

     In the April 2018 year, migrant arrivals on work visas rose 5% percent to

46,400, while there was a 14% fall in arrivals on residence visas, compared with

a year ago, Statistics New Zealand said.

     Retail trade survey for the first quarter:

                                                  Q1                          Q4

--------------------------------------------------------------------------------

                               (seasonally-adjusted)       (seasonally-adjusted)

Retail Sales Volume                            +0.1%  +1.4% (revised from +1.7%)

MNI median forecast                            +1.0%

Core Retail Sales                              +0.8%                       +1.8%

Main Contributors:

Motor Vehicle and Parts                        -0.9%                       +0.6%

Fuel Retailing                                 -2.1%                       -1.0%

Food and Beverage Services                     -1.1%                       +3.9%

Supermarket and Grocery

Stores                                         +1.0%                       +1.3%

Liquor                                         +2.8%                       +3.5%

Clothing, Footwear etc                         -5.0%                       +1.5%

Accommodation                                  +1.2%                       -1.4%

Recreation Goods                               -1.9%                       +0.5%

Hardware, Building etc                         -0.6%                       -0.6%

Retail Sales Value                             +0.2%                       +1.7%

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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